Berkshire Hathaway (BRK-B) underperformed the S&P 500 (SPY) last month. Berkshire Hathaway lost 8.9%, while the S&P 500 saw a negative price action of 6.6%. To be sure, a month of underperformance doesn’t bother chair Warren Buffett, who’s known for his long-term and value investments. Buffett has beaten markets handsomely in aggregate over the last five decades.
However, Berkshire’s outperformance versus the S&P has narrowed this century. The stock has underperformed the S&P 500 by a wide margin year-to-date as well. In an interview in April, when Buffett was asked “which would be the better investment to put in a child’s account—a share in Berkshire, or a share in the S&P,” he replied, “I think the financial result would be very close to the same.” While Buffett expects Berkshire to deliver “very modest” outperformance over the markets, even that has been elusive so far this year.
Last month, Berkshire Hathaway held its annual meeting and Buffett and vice chair Charlie Munger spoke on several topics. Read Berkshire’s Annual Meeting Answers Some Questions but Not Others for a broad overview of the widely followed event. Coming back to Berkshire’s May performance, some of its top holdings came under pressure amid the escalation in the US-China trade war. Apple (AAPL), which was Berkshire’s largest holding at the end of the first quarter, fell 12.7% in May and underperformed the NASDAQ Composite Index (QQQ) and other FAANG stocks.